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At first glance, marketing franchises to millennials might seem like a bad idea. Gen-y is seemingly broke, living with their parents, and carrying ungodly amounts of student loan debt. It doesn’t necessarily sound like an ideal formula for success (especially considering the large investment that franchisees have to make). However, millennials aren’t the “elusive generation” that people claim them to be – not in terms of economics or scarcity. It’s easy enough to have an idea of who millennials are: cash-strapped entitled tech-savvy products of the “participation award” generation. But it’s not the whole truth.
In fact, 35% of house purchases in 2015 were made by millennials. The median net worth of millennials is slightly above $10,000, yet the average net worth is around $75,000. While many millennials are not even close to being financially capable of buying a franchise, it does not mean the entire generation is worth putting on the back-burner.
The largest estimates for millennial long term debt are capped at around two-thirds, with 81% of college educated millennials having long-term debt. There are approximately 83.1 million millennials living in the US. A high view (accounting for debt figures) suggests there are around 15 million candidates without long-standing debt.
While quick math doesn’t solve much for marketers, avoiding the question of whether or not to market to millennials doesn’t solve anything either.
It’s too easy to get stuck in a trap in which you make marketing decisions based on intuition, or back up everything with big data and miss the small picture – the individual. It’s like focusing on a barren forest and missing all of the fruiting trees.
Are millennials ready to buy franchises?
Short answer yes. Long answer yes.
Millennials are already buying franchises in real-estate and food amongst other fields. There are also franchisees who have offspring that are willing to take over and grow the “family” business. Not to mention that gen-y also made up 15% of attendees at the International Franchise Expo in 2015.
There is plenty of evidence to state that millennials are in fact ready to start franchising. Yet a common response from marketing executives and franchise development directors is that millennials lack the capital to successfully open a franchise. While this may be true for a large portion of the generation, it’s not true for everyone.
So is corporate turning a blind eye to gen-y actually hurting their chances of closing a sale?
The best way to sum this up comes from AJ Agrawal, CEO of Alumnify, “Regardless of whether millennials are the future of franchises or not, the fact is they simply have to be.”
It’s a trivial topic to think about as 15 years from now millennials are going to fit right into the median age range of franchisees between between 45-54. And 15 years from now, we’ll be discussing the purchasing power of gen-z (or the iGeneration), and whether or not they’re ready for franchising.
So why would a millennial buy a franchise if a company has routinely ignored them?
It won’t be an easy decision for your marketing team to make in terms of seeking millennial franchisees, but it is without a doubt worth the consideration.
I’ve outlined a few ideas to get your team humming with possibilities.
How to sell franchises to Millennials:
- Mitigate risk/be transparent:
It seems trite to say, but the great recession left a lasting impact on the minds of millennials. Keeping your franchise accessible means keeping your numbers straight and your operations transparent. Millennials People like to know what they can expect with their investment.
- Simultaneously appeal to both millennials and their parents:
Due to the fact there are many millennials who have the entrepreneurial spirit, yet lack the funds for such a heavy investment, consider appealing to both millennials and their parents. The opportunity to exists to capitalize on the influx of baby boomer cash from a 401k or retirement fund. There will likely be a large transfer of wealth or franchise locations between these two generations. Not to mention co-ownership is already a large part of franchising.
- Get millennials on your franchise sales team:
If you make the decision to sell to millennials, it makes sense to have one on the team right? Here’s a decent checklist to draw in better candidates for the job.
- Be active on social media:
Digital natives expect to be able to find almost everything through social media. And beyond just attracting younger franchisees, it’s also about maintaining a presence across as much of the web as possible.
- Appeal to the creative factors of running a business:
“64% of Millennials would rather make $40,000 a year at a job they love than $100,000 a year at a ‘boring’ job,” according to the Wall Street Journal. Too many seemingly over-corporatized rules and regulations might stifle potential prospects. If there are portions of your franchise that have the capability of being a little open and unique, let millennials know they can make a part of the business their own.
- Consider lowering costs of starting a franchise:
A&W is already doing so. The long list of fees including: initial franchise fees, royalties, training, maintenance, insurance, advertising, auditing, legal fees, etc. can be an extreme barrier to potential franchisees. New franchising/financial models might be an excellent way to expand the business.
- Don’t mix generations:
Millennials may be a finicky bunch if you think about it from a marketing perspective. Older millennials are a completely different breed compared to younger millennials. There isn’t a magic cure-all when it comes to gen-y. However, there are plenty of opportunities, you just have to know how to look for them.
- No two millennials are the same. There is a wide range of cultural and socio-economic differences that make up the backbone of this generation.
- Get creative. There is no reason to think that your marketing efforts that work this year will work next year, or five years from now.
- The quicker you can adopt the younger generation, the quicker you can grow your brand.
Thanks for reading!